Contingency Plans – Crisis Management in Lean Organizations

In a previous post we eluded that lean organizations are likely to be more susceptible to disruptions or adverse conditions and may even have a greater impact on the business. To some degree this may be true, however, in reality, Lean has positioned these organizations to be more agile and extremely responsive to crisis situations to mitigate losses.

True lean organizations have learned to manage change as normal course of operation. A crisis only presents a disruption of larger scale. Chapter 10 of Steven J. Spear’s book, “Chasing the Rabbit”, exemplifies how high velocity, or lean, organizations have managed to overcome significant crisis situations that would typically cripple most organizations.

Problem solving is intrinsic at all levels of a lean organization and, in the case of Toyota, problem solving skills extend beyond the walls of the organization itself. It is clear that an infrastructure of people having well developed problem solving skills is a key component to managing the unexpected. The events presented in this chapter demonstrate the agility that is present in a lean organization, namely Toyota in this case and it’s supplier base.

Training is a Contingency

Toyota has clearly been the leader in Lean manufacturing and even more so in developing problem solving skills at all levels of the organization company-wide. The primary reason for this is the investment that Toyota puts into the development of people and their problem solving skills at the onset of their employment with the company. The ability to see problems, correct them in real time, and share the results (company-wide) is a testament to the system and it’s effectiveness has been proven on many occassions.

Prevention, preparation, and training (which is also a form of prevention) are as much an integral part of contingency planning as are the actual steps that must be executed when a crisis situation occurs. Toyota has developed a rapid response reflex that is inherent in the organization’s infrastructure to rapidly regain it’s capabilities when a crisis strikes.

Crisis Culture

We highly recommend reading Steven J. Spear’s “Chasing the Rabbit” to learn and appreciate the four capabilities that distinguish “High Velocity” organizations. The key to lean is creating a cultural climate that is driven by the relentless pursuit of improvement and elimination of waste. Learning to recognize waste and correcting the condition as it occurs requires keen observation and sharp problem solving skills.

Creating a culture of this nature is an evolutionary process – not revolutionary. In many ways the simplicity of the four capabilities is it’s greatest ally. Instilling these principles and capabilities into the organization demands time and effort, but the results are well worth it. Lean was not intended to be complex and the principles demonstrated and exemplified in Chasing the Rabbit confirm this to be true. This is not to be construed as saying that the challenges are easy … but with the right team they are certainly easier.